U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 10-QSB

(Mark One)



[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934



For the quarterly period ended: September 30, 2004



[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934



For the transition period from ___ to ____



Commission file number 0-17232



SURE TRACE SECURITY CORPORATION(Exact name of small business issuer as specified in its charter)



|UTAH                                                          | 84-0959153                       
|------------------------------------------------------------- | ---------------------------------
|(State or other jurisdiction of
incorporation or organization | (IRS Employer
Identification No.)

1073 Cambie Street 
Vancouver, British Columbia, Canada V6B 5L7
(Address of principal executive offices)

(604) 637-8200
(Issuer's telephone number)

(Former name, former address and former fiscal year, if changed since last report)

Former Address: 1530 9th Ave S.E., 
Calgary, Alberta Canada T2G 0T7

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



Yes XNo __



State the number of shares outstanding of each of the issuer's classes of common equity, as of the last practicable date:



109,398,886 shares of common stock, $0.001 par value per share, as of October 18, 2004.



Transitional Small Business Disclosure Format (check one): Yes No X

SURE TRACE SECURITY CORPORATION





INDEX





|PART 1.  | FINANCIAL INFORMATION                                                                                           | PAGE
|-------- | --------------------------------------------------------------------------------------------------------------- | ----
|         |                                                                                                                 |     
|Item 1   | Financial Statements                                                                                            |     
|         |                                                                                                                 |     
|         | Consolidated Balance Sheet as of September 30, 2004 and December 31, 2003                                       |     
|         |                                                                                                                 |     
|         | Consolidated Statement of Operations for the three month period and nine month period ended September 30, 2004  |     
|         |                                                                                                                 |     
|         | Consolidated Statements of Cash Flows for the three month period and nine month period ended September 30, 2004 |     
|         |                                                                                                                 |     
|         | Consolidated Statements of Changes in Stockholders' Deficiency                                                  |     
|         |                                                                                                                 |     
|         | Notes to Consolidated Financial Statements                                                                      |     
|         |                                                                                                                 |     
|Item 2   | Management Discussion and Analysis                                                                              |     
|         |                                                                                                                 |     
|         |                                                                                                                 |     
|         |                                                                                                                 |     
|PART II. | OTHER INFORMATION                                                                                               |     
|         |                                                                                                                 |     
|Item 1   | Legal Proceedings                                                                                               |     
|         |                                                                                                                 |     
|Item 2   | Changes in Securities                                                                                           |     
|         |                                                                                                                 |     
|Item 3   | Defaults Upon Senior Securities                                                                                 |     
|         |                                                                                                                 |     
|Item 4   | Submission of Matters to a Vote of Security Holders                                                             |     
|         |                                                                                                                 |     
|Item 5   | Other Information                                                                                               |     
|         |                                                                                                                 |     
|Item 6   | Exhibits and Reports on Form 8K                                                                                 |     
|         |                                                                                                                 |     
|         |                                                                                                                 |     
|         | SIGNATURES                                                                                                      |     
|         |                                                                                                                 |     
|         | EXHIBIT INDEX                                                                                                   |     

















SURE TRACE SECURITY CORPORATION





PART 1  FINANCIAL INFORMATION





ITEM 1.  FINANCIAL STATEMENTS



The unaudited condensed financial statements accompanying this Quarterly Report for the period ended September 30, 2004, have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-QSB and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature. Operating results for the three month periods ended September 30, 2004 and 2003 are not necessarily indicative of the results that may be expected for the year ending December 31, 2004. For further information refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-KSB for the year ended December 31, 2003.





SURE TRACE SECURITY CORPORATION



Consolidated Financial Statements

(Expressed in US Dollars)

September 30, 2004 and 2003



| | Index                                                                                                           | Page
| | --------------------------------------------------------------------------------------------------------------- | ----
| |                                                                                                                 |     
| | Consolidated Balance Sheet as of September 30, 2004 and December 31, 2003                                       |     
| |                                                                                                                 |     
| | Consolidated Statement of Operations for the three month period and nine month period ended September 30, 2004  |     
| |                                                                                                                 |     
| | Consolidated Statements of Cash Flows for the three month period and nine month period ended September 30, 2004 |     
| |                                                                                                                 |     
| | Consolidated Statements of Changes in Stockholders' Deficiency                                                  |     
| |                                                                                                                 |     
| | Notes to Consolidated Financial Statements                                                                      |     



|SURE TRACE SECURITY CORPORTATION                           
|-----------------------------------------------------------
|Consolidated Balance Sheets                                
|(Unaudited; Expressed in US Dollars)                       
|                                                           
|                                                           
|Assets                                                     
|Current                                                    
|Cash                                                       
|Receivables                                                
|                                                           
|                                                           
|Capital assets  (Note 9)                                   
|Loan receivable                                            
|Prepaid deposits                                           
|                                                           
|                                                           
|                                                           
|Liabilities                                                
|Current                                                    
|Accounts payable                                           
|Accrued liabilities (Note 4)                               
|Obligation under capital lease                             
|Convertible debenture (Note 10)                            
|Due to related parties (Note 5)                            
|Notes payable                                              
|                                                           
|                                                           
|Obligation under capital lease                             
|                                                           
|Total Liabilities                                          
|                                                           
|Stockholders Deficiency                                   
|Capital stock                                              
|Authorized:                                                
|500,000,000
common shares of $0.001 par value              
|10,000,000
preferred shares of $0.001 par value            
|Issued:                                                    
|106,464,886
common shares
(2003  52,340,038 common shares)
|Additional paid-in capital                                 
|                                                           
|Deficit                                                    
|Accumulated comprehensive deficit                          
|                                                           
|                                                           
|                                                           







See accompanying notes to the financial statements.





|SURE TRACE SECURITY CORPORATION                                         |                                                     |                                                   
|----------------------------------------------------------------------- | --------------------------------------------------- | --------------------------------------------------
|Consolidated Statements of Operations                                   |                                                     |                                                   
|(Unaudited; Expressed in US Dollars)                                    |                                                     |                                                   
|                                                                        | For the Three Months Ended
September 30
(unaudited) | For the Nine Months
Ended September 30
(unaudited)
|                                                                        | 2004                                                | 2003                                              
|                                                                        |                                                     |                                                   
|Sales                                                                   | $    21,910                                         | 10,120                                            
|Cost of sales                                                           | 531                                                 | 5,800                                             
|Gross profit                                                            | 21,379                                              | 4,320                                             
|                                                                        |                                                     |                                                   
|                                                                        |                                                     |                                                   
|Expenses                                                                |                                                     |                                                   
|Advertising                                                             | 5,819                                               | 3,202                                             
|Accounting                                                              | 34,381                                              | -                                                 
|Amortization and depreciation                                           | 5,119                                               | 5,995                                             
|Bad debt                                                                | 25,591                                              | -                                                 
|Bank charges and interest expense                                       | 13,544                                              | -                                                 
|Consulting                                                              | 1,448,106                                           | 690,621                                           
|Corporate finance fees                                                  | -                                                   | -                                                 
|Debt Settlement                                                         | 350,000                                             | -                                                 
|Equipment rental                                                        | 3,547                                               | 5,907                                             
|Finders fees                                                            | 1,035                                               | -                                                 
|General and administrative                                              | 43,035                                              | 22,925                                            
|Office expenses                                                         | 21,269                                              | 9,195                                             
|Professional fees                                                       | 15,332                                              | 59,807                                            
|Promotion                                                               | 25,182                                              | 18,879                                            
|Rent                                                                    | 17,318                                              | -                                                 
|Transportation                                                          | 4,336                                               | 12,109                                            
|Travel                                                                  | 92,361                                              | 19,421                                            
|Wages and benefits                                                      | 327,360                                             | 230,739                                           
|Total expenses                                                          | 2,433,335                                           | 1,078,800                                         
|Net loss for the period                                                 | (2,411,956)                                         | (1,074,480)                                       
|Earnings loss per share basic and diluted                              | (0.03)                                              | (0.08)                                            
|Weighted average number of common shares outstanding basic and diluted | 89,003,552                                          | 47,837,018                                        

|SURE TRACE SECURITY CORPORATION                        |                                                      
|------------------------------------------------------ | -----------------------------------------------------
|Consolidated Statements of Cash Flows                  |                                                      
|(Unaudited; Expressed in US Dollars)                   |                                                      
|                                                       | For the Three Months
Ended  September 30,
(unaudited)
|                                                       | 2004                                                 
|Cash flows derived from (applied to)                   |                                                      
|Operating                                              |                                                      
|Net loss                                               | (2,411,956)                                          
|Depreciation and amortization                          | 5,119                                                
|Bad debt                                               | 25,591                                               
|Compensation for options granted                       | 333,552                                              
|Stock issued for services/debt                         | 1,263,583                                            
|Changes in non-cash operating working capital          |                                                      
|Receivables                                            | (22,736)                                             
|Prepaid deposits                                       | (125)                                                
|Accounts payable                                       | 325,545                                              
|Accredited to convertible debenture                    | 1,558                                                
|Accrued liabilities                                    | 34,464                                               
|Loan receivable                                        | (78,005)                                             
|                                                       | (523,410)                                            
|Financing                                              |                                                      
|Capital stock issued for cash                          | 760,000                                              
|Due to related parties                                 | 1,023                                                
|Capital lease obligations                              | 1,050                                                
|Issuance of share capital/subscriptions                | (200,000)                                            
|Increase (decrease) from note payable                  | 1,780                                                
|Proceeds from convertible debenture                    | -                                                    
|                                                       | 563,853                                              
|Investing                                              |                                                      
|Capital expenditures                                   | -                                                    
|Cash acquired in acquisition                           | -                                                    
|                                                       | -                                                    
|Effect of exchange rate changes on cash                | (114,219)                                            
|Net increase (decrease) in cash                        | (73,776)                                             
|Cash, beginning of period                              | 86,422                                               
|Cash, end of period                                    | 12,646                                               
|Non-cash investing and financing activities:           |                                                      
|Preferred shares issued for Identex acquisition        | -                                                    
|Capital stock issued on conversion of
Preferred shares | -                                                    

See accompanying notes to the financial statements.



|SURE TRACE SECURITY CORPORATION                     |              |        |         |            |            |        
|--------------------------------------------------- | ------------ | ------ | ------- | ---------- | ---------- | -------
|                                                    |              |        |         |            |            |        
|Consolidated Statements of Stockholders Deficiency |              |        |         |            |            |        
|Nine Months ended September 30, 2004                |              |        |         |            |            |        
|(Unaudited; Expressed in US Dollars)                |              |        |         |            |            |        
|                                                    |              |        |         |            |            |        
|                                                    |              |        |         |            |            |        
|                                                    |              |        |         | Additional |            | hensive
|                                                    | Common stock |        | paid-in |            | income     |        
|                                                    | Shares       | Amount |         | Capital    |            | (loss) 
|                                                    |              |        |         |            |            |        
|                                                    |              |        |         |            |            |        
|Balance, December 31, 2003 (audited)                | 52,340,038   | $      | 52,340  | $          | 8,943,549  |        
|                                                    |              |        |         |            |            |        
|Shares issued for services                          | 26,556,353   |        | 26,557  |            | 2,638,727  |        
|                                                    |              |        |         |            |            |        
|Options exercised                                   | 23,514,635   |        | 23,514  |            | 1,995,819  |        
|                                                    |              |        |         |            |            |        
|Debt Settlements                                    | 4,053,860    |        | 4,054   |            | 253,716    |        
|                                                    |              |        |         |            |            |        
|Change in foreign currency translation              |              |        |         |            |            |        
|                                                    |              |        |         |            |            |        
|Equity component of convertible debenture           |              |        |         |            | 13,017     |        
|                                                    |              |        |         |            |            |        
|Imputed interest on loan due to a related party     |              |        |         |            |            |        
|                                                    |              |        |         |            |            |        
|Components of comprehensive income                  |              |        |         |            |            |        
|                                                    |              |        |         |            |            |        
|- net loss for the year to date                     |              |        |         |            |            | $      
|                                                    |              |        |         |            |            |        
|Comprehensive income (loss)                         |              |        |         |            |            | $      
|                                                    |              |        |         |            |            |        
|Balance, September 30, 2004                         | 106,464,886  | $      | 106,465 | $          | 13,844,828 |        



|1.
Presentation of Unaudited Consolidated Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|These unaudited consolidated financial statements of Sure Trace Security Corporation (the Company) have been prepared in accordance with the rules of the Securities and Exchange Commission.  Certain information and footnotes normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to such rules and regulations.  The results of operations for interim periods are not necessarily indicative of results which may be expected for any other interim period or for the year ending December 31, 2004.  This Form 10-QSB should be read in conjunction with the annual report for the year ended December 31, 2003 on Form 10-KSB filed on April 15, 2004. The consolidated interim financial statements have been prepared following the same accounting policies and methods of computation as the audited consolidated statements for the year ended December 31, 2003.

These consolidated financial statements, prepared in accordance with accounting principles generally accepted in the United States of America, include the accounts of the Company and its subsidiaries Sure Trace Security Inc. and I.D.Ology Laboratories Inc. All significant inter-company accounts and transactions have been eliminated.



|2.
Operations and going concern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|These financial statements have been prepared on the basis of accounting principles applicable to a going concern which assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations.The Company has incurred significant operating losses over the last two years, has a working capital deficiency of ($2,102,422), a stockholders deficiency of ($1,924,989), and has yet to secure significant sales. The Companys continued existence is dependent upon its ability to continue to raise capital and achieve profitable operations.  It is managements intention to continue to pursue market acceptance for its product and identify alternate equity funding sources until such time that there is sufficient operating cash flow to fund operating requirements.

The Company has raised and management feels it will continue to raise sufficient capital on a monthly basis to fund the Companys operating requirements.  There can be no assurance that such capital will be successfully obtained.  Should the Company not be able to raise sufficient capital, it will need to reduce expenses and/or curtail operations accordingly.

The Company has entered into agreements for a bridge financing in the amount of $350,000 in the form of convertible debenture securities and an equity financing in the amount of up to $8,000,000. If such agreements are performed as contemplated, the Company will have sufficient funds to meet its operational needs for the next twelve months beyond September 30, 2004.

On June 1, 2004, the Company announced the acquisition of Globe Staff Consulting (GSC), a privately owned French company. In Form 10-QSB filed for the period ended June 30, 2004, the Company explained the reasons why GSCs financial statements had not been consolidated with those of the Company. Since that date, GSC and the Company have agreed that the previous acquisition agreement will be cancelled in its entirety and that a new contract with revised terms is to be negotiated. Legal counsel has given the Company an opinion that GSC does not need to be consolidated as of September

30, 2004, or June 30, 2004. Consequently these statements do not reflect the results of GSC. As of September 30, 2004, the Company had paid $113,005 to GSC on account of the original agreement. This has been recorded as a receivable from GSC on the September 30, 2004 balance sheet, and management believes that this receivable is recoverable or is available to be applied to a future transaction. The principal of GSC has joined the board of directors of the Company.

If the going concern assumption were not appropriate for these financial statements, no material adjustments would be necessary in the carrying values of assets and liabilities as the book value currently reflects liquidation value. The reported revenues and expenses would require no adjustments and all balance sheet long-term classifications would be reclassified to current.



|3.        Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Financial instruments that potentially subject the Company to concentration of credit risk consist of interest receivable and note receivable, the balances of which are stated on the balance sheet. The Company performs ongoing credit evaluations of its debtors and maintains allowances for possible losses with, when realized, have been within the range of managements expectations.   The Company places its cash in high credit quality financial institutions.  The Company does not require collateral or other security to support financial instruments subject to credit risk.



|4.
Accrued liabilities                    
|------------------------------------------
|                                          
|                                          
|                                          
|Unpaid wages, consulting fees and benefits
|Interest payable                          
|Overdue payroll remittances               
|                                          



|5.
Due to related parties                                                                                                                                                                                                                       
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                
|In the ordinary course of business, a related company with common officers provided the Company with $36,975 of consulting services during the year ended December 31, 2003.  A balance of $34,715 remains outstanding as of September 30, 2004.



|6.
Capital Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|During the quarter ended September 30, 2004, 12,944,762 common shares were issued for services provided to the Company. The number of shares issued for services were based on the current market price of the Class A Common Stock of the Company at the time the services were provided and totalled $1,005,813. Also, during the quarter 13,443,603 common shares were issued as a result of the exercising of stock options.  The Company received $760,000 when these options were exercised.













|7.
Stock option plans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Under the Companys 2003 Special Stock Option Plan 33,000,000 options were made available to be issued to certain consultants in exchange for services.  These options are granted and exercised at the time such services are deemed to be performed at the discretion of the Board of Directors. At the time the options are exercised the difference between the exercise price and the fair market value of the stock on that day is considered by the Company to be compensation.  During the quarter ended September 30, 2004 the Company recorded $333,552 of consulting expense relating to the granting of options under this plan.

The fair values of all common share options granted are estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions for 2004; expected volatility of 201%; risk-free interest rates of 3.09% and expected life of 2 years.  The weighted-average fair value of options granted during the quarter was nil.

The following table sets forth the status of the 2003 Special Stock Option Plan for the period starting January 1, 2004 and ending September 30, 2004:



|                                                  | Shares     | Weighted average exercise price
|------------------------------------------------- | ---------- | -------------------------------
|Outstanding at January 1, 2004                    | -          |                                
|Granted and exercisable                           | 10,071,032 | $  .05                         
|Exercised                                         | 10,071,032 | $  .05                         
|Outstanding and exercisable at September 30, 2004 | -          |                                



|The following table sets forth the status of the 2003 Special Stock Option and Stock Award Plan for the period starting January 1, 2004 and ending September 30, 2004:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                  | Shares  | Weighted average exercise price
|------------------------------------------------- | ------- | -------------------------------
|Outstanding and exercisable at January 1, 2004    | 295,000 | $ .0100                        
|Granted and exercisable                           | -       |                                
|Exercised                                         | -       |                                
|Outstanding and exercisable at September 30, 2004 | 295,000 | $ .0100                        





|8.
Commitments and contingencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The Companys commitment obligations for future minimum cash payments as of September 30, 2004 are presented below. These obligations all relate to operating leases.  In prior quarters, the Company had also listed future commitments of $6,350,000 under a proprietary licensing agreement. The Company is no longer pursuing this course of business, and has cancelled the license agreement. Therefore, the commitments are no longer listed. The balance sheet includes approximately $25,000 in paid advances relating to this license agreement, and the Company believes it is recoverable.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|2006                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

|Beyond 2006 | - |  |  | 
|----------- | - |  |  | 



|9.  Equipment                 
|------------------------------
|                              
|                              
|                              
|                              
|Capitalized Leased Property   
|Computer equipment            
|Capital Assets                
|Office furniture and equipment
|Software                      
|                              
|Total                         
|                              



|10.
Convertible Debenture                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|The Company issued in May 2004 to Cornell Capital LP, (the Investor) $150,000 of convertible debentures that are convertible into shares of common stock at a discounted market price.  The convertible debentures are secured by all of Companys assets, interest bearing at 5% per annum and matured two years from the date of issuance.  The Company has the right to redeem the debenture upon 30 days notice for 120% of the amount plus accrued interest.

Upon the issuance of the notes, the net proceeds $150,000 received were allocated between the liability and equity components of the notes.  The liability component $136,983 represents the present value of the notes discounted using the interest rate that would have been applicable to non-convertible debt.  The equity component $13,017 represents the residual value of proceeds after allocated to the liability component.  Over the terms of the notes, the liability and the interest components are accreted to their face value.  As at September 30, 2004, the convertible debenture was $140,082.



|11.
Settlement with Former Affiliate                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|In October 2002, a former affiliate terminated his employment with the Company. As a result of a termination agreement, the former affiliate was to waive any remaining debt due to him by the Company in return for the issuance of common stock and warrants. Such stock and warrants were never issued by the Company, and the termination agreement remained in dispute.

In August 2004, the Company came to an agreement with the former Affiliate to settle all remaining claims for $350,000. The $350,000 was resolved by the issuance of two shares of common stock for every dollar owed in return for $350,000 of payments to be made to the Company by the former affiliate. As of September 30, 2004, $156,000 of that amount had been paid in return for $312,000 of stock. The balance of $194,000 is recorded as a remaining liability due to the former Affiliate. As a result, the Company took a total net charge of $350,000 in the quarter ended September 30, 2004.







|12.        Geographic Information                                   
|--------------------------------------------------------------------
|                                                                    
|All the Companys operations and fixed assets are located in Canada.



|13.        Legal Proceedings                                                                                                                                                                                                                   
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                               
|The Company has received various complaints from former staff through the Alberta Human Resources and Employment Branch. These claims are being addressed and are considered normal course business of operations.

Updated Details to follow.





ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS



Some discussions in this report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.



At present based on current operations, the Company does not have sufficient cash and liquid assets to satisfy its cash requirements on a monthly basis. The Company will expend approximately $6,000,000 over the next twelve months at the current level of operations., including salaries paid to employees and contractors/consultants. See Liquidity and Capital Resources  Liquidity below in this Item 2. While the Company does generate income from it wholly owned subsidiary, I.D. Ology, these proceeds are not sufficient to meet the Companys overhead.



The Company does not intend to participate in any further research and development. Any research and development work that will be undertaken will be done on a cost recovery basis from the Companys clients.



As announced October 5, 2004 Jim Mackay replaced Kjell Sudenius as interim CEO. Subsequent to this report and as announced November 23, 2004 the Company added two more board members, Tien-May Lau and Juan F. Mabanta.



Results of Operations



Comparison of quarters ended September 30, 2004 and 2003



For the three month period ended September 30, 2004 and September 30, 2003 Sure Trace incurred net losses of $2,411,956 and $1,074,480 respectively.



For the three month period ended September 30, 2004 the Companys losses increased significantly as compared to the previous year as a result of an increase primarily in consulting fees of $1,448,106, which $1,263,583 was common stock issued for services and recorded at the closing market price of day of issuance and the period charge of $350,000 as a debt settlement with a former affiliate of the Company. The Company's total operating expenses for the quarter ended September 30, 2004 were $2,433,335 compared to total operating expenses of $1,078,800 for the same period from the previous year. These increased costs occurred primarily as above with common stock issued and recorded as consultant fees.  The Company has entered into agreements for a bridge financing in the amount of $350,000 in the form of convertible debenture securities and an equity financing in the amount of up to $8,000,000 that the corporate finance fees relate to.  If such agreements are performed as contemplated, the Company will have sufficient funds to meet its operational needs for the next (12) months. Additionally the Company expects wages and benefits, professional fees, travel, sales and marketing expenses, consulting fees and administrative expenses incurred during the current fiscal year to be substantially increased over figures reported for comparative periods as a result of the continuing operations of I.D.ology and the ongoing costs which may be required by the parent.



Gross profits to offset operating expenses from the comparative periods ended September 30, 2004 and 2003 increased to $21,910from $10,120.  This change is not considered material.







Liquidity and Capital Resources



Summary of Working Capital and Stockholders' Equity



As of September 30, 2004, Sure Trace had negative working capital of ($2,102,422)and Stockholders' Deficiency of ($1,924,989) compared with negative working capital of ($1,225,194)and Stockholders' Deficiency of ($333,680) as of September 30, 2003.



The increase in Stockholders' Deficiency at September 30, 2004, as compared to the figures reported for the same period ending September 30, 2003 is primarily due to exercise of stock options and common stock issued for services.  As of September 30, 2004, the Company also had net capital assets of $66,569, cash of $12,646, accounts receivable of $80,913 (including advances made to employees) and prepaid deposits of $1,929, compared to assets as at September 30, 2003 of $112,248.   Current liabilities increased to $2,195,981 as compared to current liabilities of $1,248,692 at September 30, 2003.  The Company's accrued liabilities increased to $660,554 as of September 30, 2004 from $166,513 as of September 30, 2003.  This increase is attributed to the operations of the Company's subsidiary I.D.ology and the accrual of employment costs.



Liquidity



To the date of this report the Company has been successful in raising funds required to meet existing shortfalls for the funding of our operations.  Funds have been raised through private loans and equity financing.  During the quarter ended September 30, 2004, $523,410 of cash was used in operations.  The Company anticipates revenues generated from the business of I.D.ology to cover the Companys operating expenses beginning early in 2005.  The realization of such revenues will reduce the requirement for additional funding to cover expenses associated with the Companys operations but will not be sufficient to expand the Companys operations.  Moreover, we cannot be certain the Company will be successful in achieving revenues from those operations.  Furthermore, we cannot be certain that we will be able to raise any additional capital to fund our ongoing operations.



The Company has received written confirmation from Cornell Capital Partners, LP that they will provide the Company with $350,000 in convertible securities financing.  Cornell Capital has also provided a commitment to the Company for up to $8,000,000 in equity financing.  All of which is subject to definitive documentation and registration with the Securities and Exchange Commission.



Sources of Working Capital



The majority of the Company's financing activities subsequent to September 30, 2004 have been by way of private investor's loans and subscriptions for shares of the Company's common stock and a $150,000 convertible debenture from Cornell Capital, LLP. During the quarter ended September 30, 2004, Sure Trace's primary sources of working capital were a result of 13,443,603 stock options being exercised.  A total of $760,000was realized from such issuances with $200,000 of that amount received in the prior period and the common stock issuance in this period ending September 30, 2004.  These proceeds were allocated to ongoing operations of the Company and its wholly owned subsidiaries, I.D.ology and Sure Trace Security Inc.





On June 1, 2004, the Company announced the acquisition of Globe Staff Consulting (GSC), a privately owned French company. In Form 10-QSB filed for the period ended June 30, 2004, the Company explained the reasons why GSCs financial statements had not been consolidated with those of the Company. Since that date, GSC and the Company have agreed that the previous acquisition agreement will be cancelled in its entirety and that a new contract with revised terms is to be negotiated. Legal counsel has given the Company an opinion that GSC does not need to be consolidated as of September 30, 2004, or June 30, 2004. Consequently these statements do not reflect the results of GSC. As of September 30, 2004, the Company had paid $113,005 to GSC on account of the original agreement. This has been recorded as a receivable from GSC on the September 30, 2004 balance sheet, and management believes that this receivable is recoverable or is available to be applied to a future transaction. The principal of GSC has joined the board of directors of the Company.



The Company currently has no material commitments for capital expenditures



Off Balance Sheet Arrangements



The Company does not currently utilize any off balance sheet arrangements with unconsolidated entities to enhance liquidity and capital resource positions or for any other purpose.  Any future transactions involving off balance sheet arrangements will be scrutinized and disclosed by the Companys management

ITEM 3. Controls and Procedures



As required by Rule 13a-15 under the Securities Exchange Act of 1934 (the Exchange Act), we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2004, being the date of our most recently completed fiscal quarter.  This evaluation was carried out under the supervision and with the participation of David Downes our President and Rick Shykora our Regulatory Compliance Manager on behalf of Jim Mackay our Chairman and interim CEO.  Based upon this evaluation, David Downes concluded that our internal control over financial reporting are effective in timely alerting management to material information relating to us required to be included in our periodic SEC filings.  There have been no significant changes in our internal control over financial reporting or in other factors that have materially affected or is reasonably likely to materially affect our internal control over financial reporting.



Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer to allow timely decisions regarding required disclosure.



During our most recently completed fiscal quarter ended September 30, 2004, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to affect, our internal control over financial reporting.



The term internal control over financial reporting is defined as a process designed by, or under the supervision of, the registrant's principal executive and principal financial officers, or persons performing similar functions, and effected by the registrant's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:



Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the registrant;



Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the registrant are being made only in accordance with authorizations of management and directors of the registrant;and



Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the registrant's assets that could have a material effect on the financial statements





PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Not Applicable

ITEM 2. CHANGES IN SECURITIES

Not Applicable

ITEM 3. DEFAULT UPON SENIOR SECURITIES

Not Applicable

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not Applicable

ITEM 5. OTHER INFORMATION

Not Applicable

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

a. Exhibits and Index of Exhibits - see Exhibit Index below

b. On March 3, 2004 the Company filed Amendment No. 1 to a Form *-K/A dated May 22, 2003.  This Amendment was filed to amend the disclosures made in the previous 8-K regarding the Companys change of auditors.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SURE TRACE SECURITY CORPORATION

Date: December 22, 2004



By:/s/ Jim MackayName: Jim Mackay
Title: Chief Executive Officer

EXHIBIT INDEX

|Regulation S-B Exhibit # | Description                                                                                               | Reference                                                                                                         
|------------------------ | --------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------
|3.1                      | Articles of Incorporation                                                                                 | Incorporated by reference to Exhibits attached to Annual Report on Form 10-KSB for Fiscal Year ended June 30, 1986
|3.2                      | Bylaws of Registrant                                                                                      | Incorporated by reference to Exhibits attached to Annual Report on Form 10K for Fiscal Year ended June 30, 1986   
|3.3                      | Amendment to Articles of Incorporation                                                                    | Incorporated by reference to Exhibits attached to Form 8-K filed December 14, 1998                                
|3.4                      | Certificate of Amendment to Articles of Incorporation                                                     | Incorporated by reference to Exhibit 3 attached to Form 8-K/A dated January 29, 2003 and filed February 5, 2003   
|10.1                     | Share Purchase Agreement                                                                                  | Incorporated by reference to Exhibits attached to Form 8-K filed March 2000                                       
|10.2                     | Letter of Intent Inter national Mercantile Corp.                                                          | Incorporated by reference to Exhibits attached to Form 8-K filed March 2000                                       
|10.3                     | Stock Exchange Agreement                                                                                  | Incorporated by reference to Exhibits attached to Form 8-K filed September 2000                                   
|10.4                     | Share Purchase Agreement between the Registrant and Ingenuity Marketing (2000) Ltd. dated August 22, 2002 | Incorporated by reference to Exhibit 10.1 attached to Form 8-K filed September 3, 2002                            
|10.5                     | Stock Purchase Agreement dated October 1, 2003 between the Registrant and Can-West Venture Capital Ltd.   | Incorporated by reference to Exhibit 10.5 attached to Form 8K/A filed October 3, 2003.                            
|31                       | Rule 13a-14(a)/15d-14(a) Certification                                                                    | Filed herewith.                                                                                                   
|32                       | Section 1350 Certification                                                                                | Filed herewith.